Example: Depreciation tax-shield Saturn, Inc. is trying to decide whether to lease or buy some new equipment. The equipment costs $38,000, has a 3-year life and is worthless after the 3 years. The cost of borrowed funds is 8% and the tax rate is 34%. The equipment can be leased for $14,500 a year. What is the amount of the annual depreciation tax shield in the second year if the equipment belongs in a 30% CCA class